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| 8-K - FORM 8-K FILING DOCUMENT - OIL STATES INTERNATIONAL, INC | document.htm |
EXHIBIT 99.1
Oil States Announces Third Quarter Earnings of $0.53 per Share
HOUSTON, Nov. 3, 2009 (GLOBE NEWSWIRE) -- Oil States International, Inc. (NYSE:OIS) reported net income for the quarter ended September 30, 2009 of $26.6 million, or $0.53 per diluted share on $456.1 million of revenues and $69.0 million of EBITDA (EBITDA is defined as net income plus interest, taxes, depreciation and amortization) compared to net income of $88.1 million, or $1.68 per diluted share, on $814.8 million of revenues and $172.2 million of EBITDA reported in the third quarter of 2008. (A)
"Our long term, oil driven businesses continued to contribute positively to our consolidated financial results," stated Cindy B. Taylor, Oil States' President and Chief Executive Officer. "Year over year increases in revenues and EBITDA in our Offshore Products and Accommodations businesses partially offset a difficult quarter for our North American, natural gas leveraged businesses."
Mrs. Taylor also stated, "We remained diligent in managing our costs and improved our financial position in the third quarter, paying down approximately $48 million on our revolving credit facility. Oil States ended the third quarter with only $193 million in total indebtedness, having reduced the revolver's indebtedness by $261 million since the beginning of 2009. Our total debt to capitalization ratio decreased to 13% at September 30, 2009 from 27% at December 31, 2008."
The Company recognized an effective tax rate of 24.3% in the third quarter of 2009 compared to an effective tax rate of 37.1% in the third quarter of 2008. The year-over-year decrease in the quarterly effective tax rate was primarily driven by increased foreign sourced income which is taxed at lower statutory rates coupled with domestic tax benefits derived from estimated tax losses.
For the nine months ended September 30, 2009, the Company reported revenues of $1.6 billion and EBITDA of $148.1 million which resulted in net income of $19.2 million, or $0.39 per diluted share. The 2009 year-to-date results included a non-cash, pre-tax charge of approximately $94.5 million, or $1.65 per diluted share after-tax, taken in the second quarter related to the goodwill impairment in the rental tool reporting unit. Excluding the goodwill impairment charge taken, the Company reported $242.6 million of Adjusted EBITDA (Adjusted EBITDA is defined as EBITDA excluding the goodwill impairment charges) and $102.0 million of net income, or $2.04 per diluted share, for the nine months ended September 30, 2009. For the first nine months of 2008, the Company reported revenues of $2.0 billion and EBITDA of $418.3 million which resulted in net income of $212.8 million, or $4.10 per diluted share.
BUSINESS SEGMENT RESULTS
(Unless otherwise noted, the following discussion compares the quarterly results from the third quarter of 2009 to the results from the third quarter of 2008.)
Well Site Services
Well Site Services generated revenues of $180.4 million and EBITDA of $45.7 million in the third quarter of 2009, compared to $249.2 million and $87.5 million, respectively, in the third quarter of 2008, representing year-over-year decreases of 28% and 48%, respectively. The decrease in EBITDA was primarily due to declining revenues and margins in the rental tool and drilling businesses due to the year-over-year decrease in North American drilling and completion activity, partially offset by improved year-over-year results from the Company's oil sands accommodations.
For the third quarter of 2009, the accommodations business reported revenues of $110.3 million and EBITDA of $36.3 million, compared to revenues and EBITDA of $105.4 million and $33.9 million, respectively, in the third quarter of 2008. Accommodations revenue and EBITDA increased 5% and 7%, respectively, primarily due to increased year-over-year utilization of the Company's large mobile camp assets supporting oil sands developments partially offset by a weaker Canadian dollar and reduced non-oil sands activity.
Rental tools generated $51.7 million of revenues and $6.5 million of EBITDA in the third quarter of 2009 compared to revenue of $91.7 million and EBITDA of $30.0 million in the third quarter of 2008. Rental tool revenues and EBITDA decreased 44% and 78%, respectively, primarily due to the 52% year-over-year quarterly decline in the North American rig count which created significant pricing pressure and lower fixed cost absorption.
Drilling services generated revenues and EBITDA of $18.4 million and $2.9 million, respectively, in the third quarter of 2009 compared to $52.1 million of revenues and $20.1 million of EBITDA in the third quarter 2008. These year-over-year decreases in drilling services were primarily due to significantly lower utilization in each of the company's three primary drilling markets coupled with a substantial reduction in pricing due to significantly increased competition from fewer wells being drilled as a result of lower commodity prices coupled with excess capacity in the U.S. drilling industry as a whole.
Offshore Products
In the third quarter of 2009, Offshore Products generated $131.8 million of revenues and $23.3 million in EBITDA compared to $120.0 million of revenues and $22.9 million in EBITDA in the third quarter of 2008. The 10% year-over-year increase in revenues was primarily due to higher revenue contribution from subsea pipeline and bearing and connector products for international projects. The third quarter 2008 results were also negatively impacted by Hurricane Ike which led to certain inefficiencies and lower cost absorption in our Houston and Houma operations. Backlog totaled $252.7 million at September 30, 2009 compared to $302.8 million at June 30, 2009.
Tubular Services
Tubular Services generated revenues and EBITDA of $143.9 million and $7.2 million, respectively, during the third quarter of 2009 compared to revenues of $445.6 million and EBITDA of $68.8 million in the third quarter of 2008. Tubular Services' OCTG shipments decreased 60% to 67,500 tons in the third quarter of 2009 from 168,100 tons in the third quarter of 2008 primarily due to the 52% year-over-year quarterly decrease in the U.S. drilling rig count coupled with excess inventory across the industry. These factors, in addition to more competitive pricing, negatively impacted gross margins in the third quarter of 2009 which decreased to 7.0% from 16.6% in the third quarter of 2008. Tubular Services gross margins in the third quarter of 2009 benefited from a $1.0 million adjustment primarily related to pipe sales by a third party affiliate made in prior periods. Despite difficult market conditions, the Company's OCTG inventory declined by $7 million during the third quarter of 2009 to $289 million from $296 million reported at June 30, 2009 and declined $107 million from $396 million reported at December 31, 2008.
Oil States International, Inc. is a diversified oilfield services company. With locations around the world, Oil States is a leading manufacturer of products for deepwater production facilities and subsea pipelines, and a leading supplier of a broad range of services to the oil and gas industry, including production-related rental tools, work force accommodations and logistics, oil country tubular goods distribution and land drilling services. Oil States is publicly traded on the New York Stock Exchange under the symbol OIS.
The Company will be hosting a conference call to discuss the results for the third quarter of 2009 on Wednesday, November 4, 2009 at 11:00 am Eastern time. This call is being webcast and can be accessed at Oil States' web site at http://www.oilstatesintl.com. Participants may also join the conference call by dialing (800) 446-2782 and using the passcode of 25606374. A replay of the conference call will be available one hour after the completion of the call by dialing (888) 843-8996 and entering the passcode of 25606374.
The Oil States International, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6058
This press release contains and the associated conference call will contain forward-looking statements within the meaning of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that do not state historical facts and are, therefore, inherently subject to risks and uncertainties. The forward-looking statements included therein will be based on then current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Such risks and uncertainties include, among other things, risks associated with the general nature of the oilfield service industry and other factors discussed within the "Business" section of the Form 10-K for the year ended December 31, 2008 filed by Oil States with the SEC on February 20, 2009 and within the Company's subsequent SEC filings.
Oil States International, Inc.
Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ----------------------
2009 2008 2009 2008
------------------ ----------------------
Revenues $456,103 $814,790 $1,579,536 $2,047,401
Costs and expenses:
Cost of sales
and services 353,845 609,354 1,235,747 1,532,874
Selling, general and
administrative expenses 33,964 37,494 102,377 105,577
Depreciation and
amortization expense 30,193 27,325 86,863 75,741
Impairment of goodwill -- -- 94,528 --
Other operating income (439) (893) (181) (659)
------------------ ----------------------
Operating income 38,540 141,510 60,202 333,868
Interest expense (3,613) (5,656) (11,714) (18,416)
Interest income 27 940 350 2,756
Equity in earnings
of unconsolidated
affiliates 250 431 1,184 3,167
Other income 91 2,994 193 5,896
------------------ ----------------------
Income before
income taxes 35,295 140,219 50,215 327,271
Income tax provision (8,594) (52,040) (30,637) (114,125)
------------------ ----------------------
Net income 26,701 88,179 19,578 213,146
Less: Net income
attributable to
noncontrolling interest 122 98 357 327
------------------ ----------------------
Net income attributable
to Oil States
International, Inc. $ 26,579 $ 88,081 $ 19,221 $ 212,819
================== ======================
Net income per share
Basic $ 0.54 $ 1.77 $ 0.39 $ 4.29
Diluted $ 0.53 $ 1.68 $ 0.39 $ 4.10
Weighted average number
of common shares
outstanding
Basic 49,653 49,811 49,584 49,622
Diluted 50,153 52,322 49,886 51,949
Oil States International, Inc.
Consolidated Balance Sheets
(in thousands)
Sept. 30, June 30, Dec. 31,
2009 2009 2008 (B)
---------- ---------- ----------
Assets
Current assets
Cash and cash equivalents $ 61,281 $ 56,099 $ 30,199
Accounts receivable, net 361,549 319,690 575,982
Inventories, net 485,304 502,999 612,488
Prepaid expenses and
other current assets 13,730 16,741 18,815
---------- ---------- ----------
Total current assets 921,864 895,529 1,237,484
Property, plant and
equipment, net 726,877 707,996 695,338
Goodwill, net 217,627 214,541 305,441
Investments in
unconsolidated affiliates 4,893 4,639 5,899
Other non-current assets 35,335 35,115 54,356
---------- ---------- ----------
Total assets $1,906,596 $1,857,820 $2,298,518
========== ========== ==========
Liabilities and
stockholders' equity
Current liabilities
Accounts payable and
accrued liabilities $ 190,385 $ 158,858 $ 371,789
Income taxes 10,555 8,691 52,546
Current portion of
long-term debt 446 4,940 4,943
Deferred revenue 117,872 113,457 105,640
Other current liabilities 850 916 1,587
---------- ---------- ----------
Total current liabilities 320,108 286,862 536,505
Long-term debt (C) 192,657 238,881 449,058
Deferred income taxes 55,691 54,185 64,780
Other noncurrent liabilities 12,445 12,700 12,634
---------- ---------- ----------
Total liabilities 580,901 592,628 1,062,977
Stockholders' equity
Common stock 530 529 526
Additional paid-in capital 463,920 459,104 453,733
Retained earnings 920,222 893,643 901,001
Accumulated other
comprehensive
income / (loss) 32,403 3,446 (28,409)
Treasury stock (92,341) (92,313) (91,831)
---------- ---------- ----------
Total stockholder's equity 1,324,734 1,264,409 1,235,020
Noncontrolling interest 961 783 521
---------- ---------- ----------
Total equity 1,325,695 1,265,192 1,235,541
---------- ---------- ----------
Total liabilities and equity $1,906,596 $1,857,820 $2,298,518
========== ========== ==========
Oil States International, Inc.
Segment Data
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ----------------------
2009 2008 2009 2008
------------------ ----------------------
Revenues
Accommodations $110,299 $105,380 $ 340,531 $ 332,518
Rental tools 51,721 91,699 177,075 258,767
Drilling and other 18,380 52,086 46,525 133,316
------------------ ----------------------
Well site services 180,400 249,165 564,131 724,601
Offshore products 131,761 120,008 382,271 386,780
Tubular services 143,942 445,617 633,134 936,020
------------------ ----------------------
Total revenues $456,103 $814,790 $1,579,536 $2,047,401
================== ======================
Adjusted EBITDA (A)
Accommodations $ 36,308 $ 33,917 $ 127,833 $ 120,888
Rental tools (D) 6,517 30,029 25,784 80,689
Drilling and other 2,918 23,584 6,076 53,900
------------------ ----------------------
Well site services (D) 45,743 87,530 159,693 255,477
Offshore products 23,296 22,853 67,500 74,759
Tubular services 7,191 68,829 37,634 108,173
Corporate
and eliminations (7,278) (7,050) (22,214) (20,064)
------------------ ----------------------
Total Adjusted EBITDA (D) $ 68,952 $172,162 $ 242,613 $ 418,345
================== ======================
Adjusted EBITDA is defined as EBITDA excluding the goodwill impairment charges taken in the second quarter of 2009.
Oil States International, Inc.
Segment Data
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ----------------------
2009 2008 2009 2008
------------------ ----------------------
Revenues
Accommodations $110,299 $105,380 $ 340,531 $ 332,518
Rental tools 51,721 91,699 177,075 258,767
Drilling and other 18,380 52,086 46,525 133,316
------------------ ----------------------
Well site services 180,400 249,165 564,131 724,601
Offshore products 131,761 120,008 382,271 386,780
Tubular services 143,942 445,617 633,134 936,020
------------------ ----------------------
Total revenues $456,103 $814,790 $1,579,536 $2,047,401
================== ======================
EBITDA (A)
Accommodations $ 36,308 $ 33,917 $ 127,833 $ 120,888
Rental tools (E) 6,517 30,029 (68,744) 80,689
Drilling and other 2,918 23,584 6,076 53,900
------------------ ----------------------
Well site services (E) 45,743 87,530 65,165 255,477
Offshore products 23,296 22,853 67,500 74,759
Tubular services 7,191 68,829 37,634 108,173
Corporate and
eliminations (7,278) (7,050) (22,214) (20,064)
------------------ ----------------------
Total EBITDA (E) $ 68,952 $172,162 $ 148,085 $ 418,345
================== ======================
Operating income / (loss)
Accommodations $ 26,575 $ 23,695 $ 100,588 $ 93,761
Rental Tools (E) (4,030) 21,003 (98,997) 54,926
Drilling and other (3,697) 14,833 (13,504) 31,679
------------------ ----------------------
Well site services (E) 18,848 59,531 (11,913) 180,366
Offshore products 20,553 20,273 59,287 66,656
Tubular services 6,580 68,261 35,458 106,533
Corporate and
eliminations (7,441) (6,555) (22,630) (19,687)
------------------ ----------------------
Total operating income (E) $ 38,540 $141,510 $ 60,202 $ 333,868
================== ======================
Oil States International, Inc.
Additional Quarterly Segment and Operating Data
(unaudited)
Three Months Ended
September 30,
------------------
2009 2008
------------------
Supplemental operating data
Land drilling operating statistics
Average rigs available 37 36
Utilization 39.9% 91.8%
Implied day rate ($ in thousands per day) $ 13.8 $ 17.1
Implied daily cash margin
($ in thousands per day) $ 2.7 $ 6.9
Offshore products backlog ($ in millions) $ 252.7 $ 420.5
Tubular services operating data
Shipments (tons in thousands) 67.5 168.1
Quarter end inventory ($ in thousands) $289,447 $276,927
(A) The term EBITDA consists of net income plus interest, taxes,
depreciation and amortization. EBITDA is not a measure of
financial performance under generally accepted accounting
principles. You should not consider it in isolation from or as a
substitute for net income or cash flow measures prepared in
accordance with generally accepted accounting principles or as a
measure of profitability or liquidity. Additionally, EBITDA may
not be comparable to other similarly titled measures of other
companies. The Company has included EBITDA as a supplemental
disclosure because its management believes that EBITDA provides
useful information regarding our ability to service debt and to
fund capital expenditures and provides investors a helpful
measure for comparing its operating performance with the
performance of other companies that have different financing and
capital structures or tax rates. The Company uses EBITDA to
compare and to monitor the performance of its business segments
to other comparable public companies and as a benchmark for the
award of incentive compensation under its annual incentive
compensation plan. The following table sets forth a
reconciliation of EBITDA to net income, which is the most
directly comparable measure of financial performance calculated
under generally accepted accounting principles:
Oil States International, Inc.
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands)
(unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
----------------- ------------------
2009 2008 2009 2008
----------------- ------------------
Net income $26,579 $ 88,081 $ 19,221 $212,819
Income tax expense 8,594 52,040 30,637 114,125
Depreciation and amortization 30,193 27,325 86,863 75,741
Interest income (27) (940) (350) (2,756)
Interest expense 3,613 5,656 11,714 18,416
----------------- ------------------
EBITDA $68,952 $172,162 $148,085 $418,345
Goodwill impairment -- -- 94,528 --
----------------- ------------------
Adjusted EBITDA $68,952 $172,162 $242,613 $418,345
================= ==================
Rental Tools EBITDA 6,517 30,029 (68,744) 80,689
Goodwill impairment -- -- 94,528 --
----------------- ------------------
Adjusted Rental Tools
EBITDA $ 6,517 $ 30,029 $ 25,784 $ 80,689
================= ==================
Adjusted EBITDA is calculated by excluding the goodwill
impairment charge from the second quarter results in order to
present a more meaningful comparison of the Company's operating
results.
(B) Adjusted to reflect the retrospective application of APB 14-1
accounting for existing convertible notes effective and adopted
on January 1, 2009.
(C) As of September 30, 2009, the Company had approximately $450.3
million available under its revolving credit facility.
(D) Results for the nine months ended September 30, 2009 exclude the
goodwill impairment charge of $94.5 million, taken in the second
quarter of 2009.
(E) Results for the nine months ended September 30, 2009 include the
goodwill impairment charge of $94.5 million, taken in the second
quarter of 2009.
CONTACT: Oil States International, Inc.
Bradley J. Dodson
713-652-0582